Not really. TKLBAM uses isolated S3 storage from your regular S3 account. For more information see the TKLBAM FAQ on S3 storage. That being said, it is possible, but you will have to jump through quite a few hoops to get it to work, and the end result will still require either manual actions to be performed for each backup/restore, unless you script it.

It can't be a matter of convenience. Isolated S3 storage for TKLBAM is set up automatically when you sign up. You don't have to do anything. What advantage would you get from getting TKLBAM to use generic S3 buckets?

Unless of course you have copious amounts of data. Cost is pretty low, generally around $0.14/GB (per month if you are using it as backup, if you just want to use it to migrate you could make it a one off by deleting the data from S3). Check it all out on the pricing page in the TKLBAM docs. TKLBAM does support backup to alternate locations (rather than S3 - but you still need an Amazon account) but you'll need to configure that via CLI (see the docs - link above).

TKLBAM is the only "suppported/offical" way to upgrade but the beauty of open source is your freedom to do whatever you like. :) As TKL v2009.x is based on Ubuntu 8.04 & v11.x on Ubuntu 10.04 you could certainly find a tutorial online that will help you through that.

But it won't be fully TKL anymore, it would be more a hybrid with standard Ubuntu 10.04. For some appliances that may be good enough, but for many you will still need to manually upgrade further components to get closer back to the equivalent v11 TKL appliance. Even then I'm sure there would be numerous refinements that TKL devs have put over a standard 10.04 that you couldn't get without a clean install of v11. Bottom line there are other ways, but unless you want to learn more about it all by resolving the issues you'll most likely encounter, why not do it the easy TKLBAM way?

The size of your hard drive doesn't matter so much as the amount of data you have. TKLBAM only backs up changes from the original installation. I suggest you do a simulation run (e.g., --simulate) which will tell you how much data you have to backup. You can try adding a negative override to remove especially heavy directories (e.g., /home/user/movies) from the backup and move those files using a more conventional method (e.g., cp, mv or rsync).